A rights offering

Question

A rights offering

Quizplus · Accepted Answer

A rights offering gives existing shareholders the opportunity to purchase additional shares of the company's stock at a discounted price, creating a built-in market for the new securities. This can be a relatively low-cost way for the company to raise capital from its current shareholders. While there may be some distribution costs associated with the offering, these are typically much lower than the costs of a public offering or other forms of external financing. A rights offering can also help to increase shareholder value, as it allows shareholders to maintain their proportional ownership in the company without dilution from outside investors.

A Rights Offering